Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in the carrying amount of goodwill are as follows (in thousands):



Goodwill (gross) at December 31, 2010	$	179,286
Acquired goodwill	137
Goodwill (gross) at December 31, 2011	179,423

Accumulated impairment losses at December 31, 2010	(770		)
Goodwill impairment	(1,550		)
Accumulated impairment losses at December 31, 2011	(2,320		)

Goodwill (net) at December 31, 2011	$	177,103

Goodwill (gross) at December 31, 2011	$	179,423
Acquired goodwill	—
Foreign currency translation adjustments	(174		)
Goodwill (gross) at December 31, 2012	179,249

Accumulated impairment losses at December 31, 2011	(2,320		)
Goodwill impairment	(6,946		)
Accumulated impairment losses at December 31, 2012	(9,266		)

Goodwill (net) at December 31, 2012	$	169,983

During the third quarter of 2012, we performed an interim goodwill impairment analysis for our United Kingdom reporting unit based on our identification of impairment indicators related to our results through the end of the 2012 pool season and our expectation for continued depressed economic conditions in the United Kingdom. Our results for the nine months ended September 30, 2012 were significantly lower than our 2012 sales, gross profit and operating profit estimates for the United Kingdom reporting unit that we used in our 2011 annual goodwill impairment test. We updated our 2011 impairment analysis for both our actual 2012 year to date results and our updated growth estimates for future years based on expectations for a more prolonged economic recovery period in the United Kingdom. These updates significantly impacted our projected future cash flow calculation for the United Kingdom reporting unit and resulted in a much lower estimated fair value for that reporting unit. As a result of our interim impairment analysis, we recorded a non-cash goodwill impairment charge of $6.9 million on the Consolidated Statements of Income. This charge was equal to the total September 30, 2012 goodwill carrying amount of our United Kingdom reporting unit of $6.9 million.

In October 2012, we performed our annual goodwill impairment test and determined that the goodwill attributed to all of our reporting units was not impaired. As of October 1, 2012, we had 209 reporting units with allocated goodwill balances. The highest goodwill balance was $5.7 million and the average goodwill balance was $0.8 million.

In 2011, we identified three Horizon locations in Texas that had estimated fair values below their carrying values. The combined carrying value of goodwill for these three reporting units was $4.6 million. Since the estimated fair value for each reporting unit’s goodwill was below the respective carrying value, we recognized the total difference of $1.6 million as an impairment loss on the Consolidated Statements of Income.

Other intangible assets consisted of the following (in thousands):



	December 31,
	2012			2011
Horizon tradename (indefinite life)	$	8,400		$	8,400
National Pool Tile (NPT) tradename (20 year life)	1,500			1,500
Non-compete agreements (5 year weighted average useful life) ⁽¹⁾	4,531			10,223
Employment contracts ⁽¹⁾	—			650
Distribution agreement ⁽¹⁾	—			6,115
Other intangible assets	14,431			26,888
Less accumulated amortization ⁽¹⁾	(3,378		)	(15,150		)
Other intangible assets, net	$	11,053		$	11,738

⁽¹⁾ All fully amortized intangible assets and related amortization amounts were removed in the fourth quarter of 2012.

The Horizon tradename has an indefinite useful life and is not subject to amortization. However, we evaluate the useful life of this intangible asset and test for impairment annually. The NPT tradename and the non-compete agreements have finite useful lives and we amortize the estimated fair value of these agreements using the straight-line method over their respective useful lives. The useful lives for our non-compete agreements are based on their contractual terms.

Other intangible amortization expense was $0.9 million in 2012, $1.2 million in 2011 and $1.9 million in 2010.

The table below presents estimated amortization expense for other intangible assets for the next five years (in thousands):



2013	$	829
2014	686
2015	174
2016	114
2017	82

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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